Correlation Between DnB ASA and Sparebanken Mre

Can any of the company-specific risk be diversified away by investing in both DnB ASA and Sparebanken Mre at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DnB ASA and Sparebanken Mre into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DnB ASA and Sparebanken Mre, you can compare the effects of market volatilities on DnB ASA and Sparebanken Mre and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DnB ASA with a short position of Sparebanken Mre. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Sparebanken Mre.

Diversification Opportunities for DnB ASA and Sparebanken Mre

0.55

Correlation Coefficient

DnB ASA  Sparebanken Mre

Very weak diversification

The 3 months correlation between DnB and Sparebanken is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Sparebanken Mre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Mre and DnB ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DnB ASA are associated (or correlated) with Sparebanken Mre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Mre has no effect on the direction of DnB ASA i.e., DnB ASA and Sparebanken Mre go up and down completely randomly.

Pair Corralation between DnB ASA and Sparebanken Mre

Assuming the 90 days trading horizon DnB ASA is expected to generate 1.92 times less return on investment than Sparebanken Mre. In addition to that, DnB ASA is 1.0 times more volatile than Sparebanken Mre. It trades about 0.05 of its total potential returns per unit of risk. Sparebanken Mre is currently generating about 0.09 per unit of volatility. If you would invest  9,698  in Sparebanken Mre on April 24, 2025 and sell it today you would earn a total of  864.00  from holding Sparebanken Mre or generate 8.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DnB ASA  vs.  Sparebanken Mre

DnB ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, DnB ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sparebanken Mre

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Mre are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sparebanken Mre may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with DnB ASA and Sparebanken Mre

The main advantage of trading using opposite DnB ASA and Sparebanken Mre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA position performs unexpectedly, Sparebanken Mre can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sparebanken Mre will offset losses from the drop in Sparebanken Mre's long position.

The idea behind DnB ASA and Sparebanken Mre pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.